Labor Productivity and Costs

For release 10:00 a.m. (EDT) Thursday, March 29, 2012 USDL-12-0550
Technical information: (202) 691-5618 • dipsweb@bls.gov • www.bls.gov/lpc
Media contact: (202) 691-5902 • PressOffice@bls.gov
NOTE: With the update of multifactor productivity measures for detailed industries on Sept. 26, 2012,
measures of output, output per hour, output per worker, value of production, implicit price deflator,
and unit labor costs for 2008-2010 were revised for NAICS 3346 and NAICS 334. The revisions supersede
the data for these industries published in this news release. The revised measures are available from
the online data query tool and in the industry labor productivity tables on this website.
PRODUCTIVITY AND COSTS BY INDUSTRY: MANUFACTURING INDUSTRIES, 2010
Labor productivity - defined as output per hour - rose in 83 percent of the 86 detailed manufacturing
industries studied in 2010, the U.S. Bureau of Labor Statistics reported today. This was up from 30
percent in 2009. Unit labor costs, which reflect the total labor costs required to produce a unit of output,
declined in 73 percent of the industries in 2010 compared to only 21 percent in 2009, as productivity
increased more rapidly than hourly compensation.
For many industries, the productivity increases in 2010 were driven by large increases in output coupled
with declines or more modest gains in hours. Output rose in 64 of the 86 industries in 2010, and hours
rose in 40 of the industries. The number of industries with increases in labor productivity and output was
higher in 2010 than in any other year since 2005. The number of industries with increases in hours was
higher than in any year since 1997, and the number with declines in unit labor costs was the highest since
the series began in 1987.
Industry labor productivity measures are updated as data become available. Productivity measures for
industries in other sectors can be accessed on the BLS Labor Productivity and Costs website at
www.bls.gov/lpc.
Labor productivity increased in 19 of the 21 3-digit NAICS manufacturing industries in 2010. Output
increased in 16 of these industries, and hours declined in 11. Unit labor costs fell in 20 of the 3-digit
manufacturing industries in 2010.
Industry productivity performance over the longer, 1987-2010 period contrasts with the performance in
2010 and the previous year. Between 1987 and 2010, labor productivity increased in 94 percent of the
detailed manufacturing industries, with over 85 percent of industries recording average productivity
growth between 0.1 and 4.0 percent per year. In 2010, large gains in industry productivity were more
common than over the 1987-2010 period, while in 2009 large falloffs were more common. In 2010, 57
percent of industries posted productivity gains of 6.1 percent or more, while in 2009, 40 percent of
industries recorded productivity losses of 6.0 percent or more.

Technical Note
Labor Productivity: The industry labor productivity measures describe the relationship between industry
output and the labor time involved in its production. They show the changes from period to period in
the amount of goods and services produced per hour. Although the labor productivity measures relate
output to hours of all persons in an industry, they do not measure the specific contribution of labor or
any other factor of production. Rather, they reflect the joint effects of many influences, including
changes in technology; capital investment; utilization of capacity, energy, and materials; the use of
purchased services inputs, including contract employment services; the organization of production;
managerial skill; and the characteristics and effort of the workforce.
Output: Industry output is measured as an annual-weighted index of the changes in the various products
(in real terms) provided for sale outside the industry. Real industry output is usually derived by deflating
nominal sales or values of production using BLS price indexes, but for some industries it is measured by
physical quantities of output. For manufacturing industries, industry output reflects sectoral value of
production, derived by adjusting shipments for changes in inventories and removing intra-industry
transactions.
Industry output measures are constructed primarily using data from the economic censuses and annual
surveys of the Census Bureau, U.S. Department of Commerce, together with information on price
changes primarily from BLS.
Labor Hours: The primary source of industry employment and hours data is the BLS Current
Employment Statistics (CES) survey. The CES provides monthly data on the number of total and
production worker jobs held by wage and salary workers in nonfarm establishments as well as data on
the average weekly hours of production workers in those establishments. CES data are supplemented
with data from the Current Population Survey (CPS) to estimate employment and hours of self-
employed and unpaid family workers in each industry. Data from the CPS, together with the CES data,
are also used to estimate the historical average weekly hours of nonproduction workers for each industry.
CES and CPS data are supplemented or further disaggregated for some industries using data from the
BLS Quarterly Census of Employment and Wages (QCEW), the Census Bureau, or other sources. Hours
of all persons in an industry are treated as homogeneous and are directly aggregated.
Unit Labor Costs: Unit labor costs represent the cost of labor required to produce one unit of output.
The unit labor cost indexes are computed by dividing an index of industry labor compensation by an
index of real industry output. Unit labor costs also describe the relationship between compensation per
hour and real output per hour (labor productivity). Increases in hourly compensation increase unit labor
costs; increases in labor productivity offset compensation increases and lower unit labor costs.
Compensation, defined as payroll plus supplemental payments, is a measure of the cost to the employer
of securing the services of labor. Payroll includes salaries, wages, commissions, dismissal pay, bonuses,
vacation and sick leave pay, and compensation in kind. Supplemental payments include legally required
expenditures and payments for voluntary programs. The legally required portion consists primarily of
Federal old age and survivors’ insurance, unemployment compensation, and workers’ compensation.
Payments for voluntary programs include all programs not specifically required by legislation, such as the
employer portion of private health insurance and pension plans.
Revisions: The measures in this news release incorporate 2010 data and revisions to 2009 data from the
Annual Survey of Manufactures (ASM) published by the Census Bureau. The measures in this release
also incorporate the annual benchmark revision of the BLS Current Employment Statistics (CES) survey
published in February 2012. All of the measures for 2010 in this release are preliminary and subject to
revision.
Additional Information: With this release, some series that were formerly provided upon request are now
available on the BLS Labor Productivity and Costs website at www.bls.gov/lpc. These include annual
levels of industry employment and hours, nominal values of production and labor compensation, and
implicit price indexes for industry output.
The industries included in this news release are classified according to the 2007 NAICS. While the rates
of change reported by BLS in this release are rounded to one decimal place, all percent changes are
calculated using index numbers rounded to three decimal places.
Year-to-year movements in industry productivity may be erratic, particularly in smaller industries. The
annual measures based on sample data may differ from measures generated by a census of
establishments in the industry. Annual changes in an industry’s output and use of labor may reflect
cyclical changes in the economy as well as long-term trends. As a result, long-term productivity trends
tend to be more reliable indicators of industry performance than year-to-year changes.
Industry productivity and related indexes; rates of change; and levels of industry employment, hours,
nominal value of production and labor compensation can be accessed online by visiting the BLS Labor
Productivity and Costs website at www.bls.gov/lpc. Additional information is available by calling the
Division of Industry Productivity Studies (202-691-5618) or by sending an e-mail to dipsweb@bls.gov.
Information in this report will be made available to sensory-impaired individuals upon request. Voice
phone: 202-691-5618; TDD message referral phone number: 1-800-877-8339.
To subscribe to the industry productivity program’s news releases, customers can register on the BLS
website at https://subscriptions.bls.gov/accounts/USDOLBLS/subscriber/new.